Christine Lagarde, the current chairperson of the International Monetary Fund (IMF) and presidential nominee for European Central Bank (ECB), has often made headlines for her bold statements regarding blockchain technology and cryptocurrencies. Last week, in an opening statement, addressed to the Economic and Monetary Affairs Committee of the European Parliament, Lagarde calls for lawmakers to ensure appropriate regulation is in place to steer implications of new technologies—including digital currencies—towards the public good.
As a part of her recent keynote, Lagarde urges on the judiciary and financial regulators to be fair and tolerant to the applications of distributed ledger technology and cryptocurrencies, by embracing methodical approach while considering their implementation. It means organizations have to be alert about the risks that digital currencies bring to the table, in terms of financial stability, privacy or criminal activities. However, the wider social benefits from innovation and development of blockchain technology should not be overlooked.
She says, “For central banks to safely navigate these currents and crosswinds, inclusiveness is essential.” She further identifies the first step to inclusiveness: cooperation. She believes that there is a wealth of expertise within the Eurosystem that can be drawn on to prepare for the future besides strengthening their capacity to tackle common challenges. She also underlines how central banks can also play a crucial role in sustaining global cooperation, and thus helping to underpin the multilateral order in their fields of competence.
Lagarde has also promised that if she were to lead the ECB, she would primarily focus on making sure that organizations promptly adapt to the rapidly changing financial environment. In February, Lagarde claimed that regulation of cryptocurrencies is inevitable and demands attention on an international level. On top of that, in April, she commented that blockchain innovators are transforming the traditional financial world and having a widespread impact on incumbent players.
On the flipside, ECB’s executive member of the board, Yves Mersch, criticized Facebook’s stablecoin project, Libra, earlier this month, even labeling it as “cartel-like” governance. Only last month, the ECB compiled a comprehensive report on the use cases of stablecoins, shedding light on how the most innovatively built stablecoins don’t do much when it comes to bringing the stability in value. They rather rely on conventional safekeeping methods for funds, said the report.